A twice-weekly syndicated newspaper column on California public affairs.

Monday, October 8, 2018

PROPS. 5, 10: A LITTLE HELP FOR THE HOUSING CRISIS?

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, OCTOBER 26, 2018, OR THEREAFTER

BY THOMAS D. ELIAS

“PROPS. 5,
10: A LITTLE HELP FOR THE HOUSING CRISIS?”

All
across California’s political spectrum, agreement is solid that this state
suffers from a significant housing crisis – one of both affordability and
supply.

But
there’s little agreement on what to do about it. Some politicians push for
massive building within existing cities, especially near rapid transit stops
and the most frequently used bus routes. Others suggest that almost half of all
newly-built housing should fall into the “affordable” category with income
limits on buyers.

One
thing for sure: steep rises in the price of existing homes make it hard for all
but the wealthiest people in the under-40 age categories to buy, especially in
coastal counties where increases have been highest. At the same time, rents in
many cities are so high that a majority of households in some counties devote half
their income or more to housing costs.

Two
propositions on the November ballot now enter this fraught area, one allowing
vast expansion of the rent controls now operating in 15 California cities,
including Los Angeles and San Francisco. The other expands the right of
homeowners over 55 to transfer existing property tax valuations to any
replacement house or condominium they might buy.

Rent
controls have been sharply limited since the late 1990s by the Costa-Hawkins
Rental Housing Act, named for two state legislators of that time.

Costa-Hawkins
greatly eased strict controls in cities like Santa Monica, Cotati and San
Francisco. Yes, rent controls there still apply to apartments (most local laws
do not cover rented single-family houses) so long as they remain occupied by
the same persons. But when renters move out, prices can rise to market rates,
often doubling or more when longtime residents move on. The original ordinances
kept strict controls in place even when vacancies occurred.

Under
those original laws, many landlords neglected maintenance: paint peeled,
plumbing deteriorated and stucco cracked without being repaired because
landlords felt their profits were too thin. Tenants often had to do the
repairs.

Costa-Hawkins
gave landlords relief, but led to widespread under-the-table sublets, with
original tenants re-renting to others at rates far below what an open market
would allow. At the same time, many tenants who rented when quite young grew
older and wealthier, but clung to their low-cost units for decades, a form of
welfare for the middle class. Few studies measure these phenomena, in part
because researchers find it hard to get honest information.

Still,
rent controls allow many to stay in prime areas they otherwise could not afford.
Expanding vacancy controls, as Prop. 10 would allow where cities choose to do
it, might slow the high-rent tide.

Prop. 5
would affect housing very differently. Current laws, adopted a decade or so
after passage of the landmark 1978 Prop. 13 property tax limits, allow
homeowners over 55 to carry their current tax valuations (1 percent of the
latest purchase price or the 1975 value, plus a 2 percent increase each year)
to a replacement home of equal or lesser value within their own county. But
only 10 of the 58 counties allow this benefit to cross county lines.

One
result is that realtors report at least 70 percent of over-55 homeowners have
not moved in 17 years. By contrast, the Rand Corp. reported in the 1970s that
the average Californian moved every seven years.

Less movement by older
homeowners cuts the ability of younger families to move into larger,
established homes often owned by seniors. What’s more, several counties that
once participated in the tax benefit transfer program – Contra Costa, Marin and
Monterey – pulled out because they believed they lost property tax money.

That
concern leads most public employee groups, including the state sheriff’s
association and teachers’ unions, to oppose Prop. 5.

But
realtors backing it say it could free existing housing for homeowners wanting
to move up in price category who now find it difficult to find homes for sale.
That, in turn, could open more starter homes for young buyers. If more homes
come on the market, realtors argue, prices may drop and ease the affordability
problem.

Taken
together, these measures have the potential to create some movement at last on
a problem area that’s been essentially frozen for decades.

-30-

Email
Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough:
The Most Promising Cancer Treatment and the Government’s Campaign to Squelch
It," is now available in a soft cover fourth edition. For more Elias
columns, visit www.californiafocus.net

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About Me

Thomas Elias writes the syndicated California Focus column, appearing twice weekly in 88 newspapers around California, with circulation over 2.2 million.
He has won numerous awards from organizations like the National Headliners Club, the California Newspaper Publishers Association, the Los Angeles Press Club, and the California Taxpayers Association. He has been nominated three times for the Pulitzer Prize in distinguished commentary.
Elias is the author of two books, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It" (now in its third edition; also published in Japanese and recently optioned for a television movie) and "The Simpson Trial in Black and White," co-authored with the late Dennis Schatzman.